G.R. No.

144315 July 17, 2006

PHILCOM EMPLOYEES UNION, Petitioner, vs. PHILIPPINE GLOBAL
COMMUNICATIONS and PHILCOM CORPORATION,
Respondents.

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CARPIO, J.:

The Case

This is a petition for review [1] to annul the Decision[2] dated 31 July 2000 of the
Court of Appeals in CA-G.R. SP No. 53989. The Court of Appeals affirmed the
assailed portions of the 2 October 1998 and 27 November 1998 Orders of the
Secretary of Labor and Employment in OS-AJ-0022-97.

The Facts

The facts, as summarized by the Court of Appeals, are as follows:

Upon the expiration of the Collective Bargaining Agreement (CBA)

between petitioner Philcom Employees Union (PEU or union, for
brevity) and private respondent Philippine Global Communications,
Inc. (Philcom, Inc.) on June 30, 1997, the parties started
negotiations for the renewal of their CBA in July 1997. While
negotiations were ongoing, PEU filed on October 21, 1997 with the
National Conciliation and Mediation Board (NCMB) National Capital
Region, a Notice of Strike, docketed as NCMB-NCR-NS No. 10-
435-97, due to perceived unfair labor practice committed by the
company (Annex 1, Comment, p. 565, ibid.). In view of the filing of
the Notice of Strike, the company suspended negotiations on the
CBA which moved the union to file on November 4, 1997 another
Notice of Strike, docketed as NCMB-NCR-NS No. 11-465-97, on
the ground of bargaining deadlock (Annex 2, Comment, p.
566, ibid.)

On November 11, 1997, at a conciliation conference held at the

NCMB-NCR office, the parties agreed to consolidate the two (2)
Notices of Strike filed by the union and to maintain the
status quo during the pendency of the proceedings (Annex 3,
Comment, p. 567, ibid.).

On November 17, 1997, however, while the union and the company
officers and representatives were meeting, the remaining union
officers and members staged a strike at the company premises,
barricading the entrances and egresses thereof and setting up a
stationary picket at the main entrance of the building. The following
day, the company immediately filed a petition for the Secretary of
Labor and Employment to assume jurisdiction over the labor
dispute in accordance with Article 263(g) of the Labor Code.

On November 19, 1997, then Acting Labor Secretary Cresenciano

B. Trajano issued an Order assuming jurisdiction over the dispute,
enjoining any strike or lockout, whether threatened or actual,
directing the parties to cease and desist from committing any act
that may exacerbate the situation, directing the striking workers to
return to work within twenty-four (24) hours from receipt of the
Secretarys Order and for management to resume normal
operations, as well as accept the workers back under the same
terms and conditions prior to the strike. The parties were likewise
required to submit their respective position papers and evidence
within ten (10) days from receipt of said order (Annex 4, Comment,
pp. 610-611, ibid.). On November 28, 1997, a second order was
issued reiterating the previous directive to all striking employees to
return to work immediately.

On November 27, 1997, the union filed a Motion for

Reconsideration assailing, among others, the authority of then
Acting Secretary Trajano to assume jurisdiction over the labor
dispute. Said motion was denied in an Order dated January 7,
1998.

As directed, the parties submitted their respective position

papers. In its position paper, the union raised the issue of the
alleged unfair labor practice of the company hereunder enumerated
as follows:

(a) PABX transfer and contractualization of PABX

service and position;
(b) Massive contractualization;

(c) Flexible labor and additional work/function;

(d) Disallowance of union leave intended for union

seminar;

(e) Misimplementation and/or non-implementation of

employees benefits like shoe allowance,
rainboots, raincoats, OIC shift
allowance, P450.00 monthly allowance, driving
 allowance, motorcycle award and full-time
physician;

(f) Non-payment, discrimination and/or deprivation of

overtime, restday work, waiting/stand by time
and staff meetings;

(g) Economic inducement by promotion during

CBA negotiation;

(h) Disinformation scheme, surveillance and

interference with union affairs;

(i) Issuance of memorandum/notice to employees

without giving copy to union, change in work
schedule at Traffic Records Section and ITTO
policies; and

(j) Inadequate transportation allowance, water and

facilities.

(Annex A, Petition; pp. 110-182, ibid.)

The company, on the other hand, raised in its position paper

the sole issue of the illegality of the strike staged by the union
(Annex B, Petition; pp. 302-320, ibid.).

On the premise that public respondent Labor Secretary

cannot rule on the issue of the strike since there was no petition to
declare the same illegal, petitioner union filed on March 4, 1998 a
Manifestation/Motion to Strike Out Portions of & Attachments in
Philcoms Position Paper for being irrelevant, immaterial and
impertinent to the issues assumed for resolution (Annex C, Petition;
pp. 330-333, ibid.).

In opposition to PEUs Manifestation/Motion, the company

argued that it was precisely due to the strike suddenly staged by
the union on November 17, 1997 that the dispute was assumed by
the Labor Secretary. Hence, the case would necessarily include the
issue of the legality of the strike (Opposition to PEUS Motion to
Strike Out; Annex F, Petition; pp. 389-393, ibid.).[3]

On 2 October 1998, the Secretary of Labor and Employment (Secretary) issued

the first assailed order. The pertinent parts of the Order read:
Going now to the first issue at hand, a reading of the complaints
charged by the Union as unfair labor practices would reveal that
these are not so within the legal connotation of Article 248 of the
Labor Code. On the contrary, these complaints are actually mere
grievances which should have been processed through the
grievance machinery or voluntary arbitration outlined under the
CBA. The issues of flexible labor and additional functions,
misimplementation or non-implementation of employee benefits,
non-payment of overtime and other monetary claims and
inadequate transportation allowance, are all a matter of
implementation or interpretation of the economic provisions of the
CBA subject to the grievance procedure.

Neither do these complaints amount to gross violations which, thus,

may be treated as unfair labor practices outside of the coverage of
Article 261. The Union failed to convincingly show that there is
flagrant and/or malicious refusal by the Company to comply with
the economic provisions stipulated in the CBA.

With respect to the charges of contractualization and economic

inducement, this Office is convinced that the acts of said company
qualify as a valid exercise of management prerogative. The act of
the Company in contracting out work or certain services being
performed by Union members should not be seen as an unfair labor
practice act per se.First, the charge of massive contractualization
has not been substantiated while the contractualization of the
position of PABX operator is an isolated instance. Secondly, in the
latter case, there was no proof that such contracting out interfered
with, restrained or coerced the employees in the exercise of their
right to self-organization. Thus, it is not unfair labor practice to
contract out work for reason of reduction of labor cost through the
acquisition of automatic machines.

Likewise, the promotion of certain employees, who are incidentally

members of the Union, to managerial positions is a prerogative of
management. A promotion which is manifestly beneficial to an
employee should not give rise to a gratuitous speculation that such
a promotion was made simply to deprive the union of the
membership of the promoted employee (Bulletin Publishing Co. v.
Sanchez, et. al., G.R. No. 74425, October 7, 1986).

There remains the issue on bargaining deadlock. The Company

has denied the existence of any impasse in its CBA negotiations
with the Union and instead maintains that it has been negotiating
with the latter in good faith until the strike was initiated. The Union,
on the other hand, contends otherwise and further prays that the
remaining CBA proposals of the Union be declared reasonable and
equitable and thus be ordered incorporated in the new CBA to be
executed.

As pointed out by the Union, there are already thirty-seven (37)

items agreed upon by the parties during the CBA negotiations even
before these were suspended. Prior to this Offices assumption over
the case, the Company furnished the Union its improved CBA
counter-proposal on the matter of promotional and wage increases
which however was rejected by the Union as divisive. Even as
the Union has submitted its remaining CBA proposals for resolution,
the Company remains silent on the matter. In the absence of any
basis, other than the Unions position paper, on which this Office
may make its determination of the reasonableness and
equitableness of these remaining CBA proposals, this Office finds it
proper to defer deciding on the matter and first allow the Company
to submit its position thereon.

We now come to the question of whether or not the strike staged by

the Union on November 17, 1997 is illegal. The Company claims it
is, having been held on grounds which are non-strikeable, during
the pendency of preventive mediation proceedings in the NCMB,
after this Office has assumed jurisdiction over the dispute, and with
the strikers committing prohibited and illegal acts. The Company
further prays for the termination of some 20 Union officers who
were positively identified to have initiated the alleged illegal
strike. The Union, on the other hand, refuses to submit this issue
for resolution.

Considering the precipitous nature of the sanctions sought by the

Company, i.e., declaration of illegality of the strike and the
corresponding termination of the errant Union officers, this Office
deems it wise to defer the summary resolution of the same until
both parties have been afforded due process. The non-compliance
of the strikers with the return-to-work orders, while it may warrant
dismissal, is not by itself conclusive to hold the strikers
liable. Moreover, the Unions position on the alleged commission of
illegal acts by the strikers during the strike is still to be heard. Only
after a full-blown hearing may the respective liabilities of Union
officers and members be determined. The case of Telefunken
Semiconductors Employees Union-FFW v. Secretary of Labor and
Employment and Temic Telefunken Micro-Electronics (Phils.), Inc.
(G.R. No. 122743 and 127215, December 12, 1997) is instructive
on this point:
 It may be true that the workers struck after the
Secretary of Labor and Employment had assumed
jurisdiction over the case and that they may have
failed to immediately return to work even after the
issuance of a return-to-work order, making their
continued strike illegal. For, a return-to-work order is
immediately effective and executory notwithstanding
the filing of a motion for reconsideration. But, the
liability of each of the union officers and the workers, if
any, has yet to be determined. xxx xxx xxx.[4]

The dispositive portion of the Order reads:

WHEREFORE, in view of all the foregoing, judgment is hereby

rendered as follows:

The Unions Manifestation/Motion to Implead Philcom Corporation is

hereby granted. Let summons be issued to respondent Philcom
Corporation to appear before any hearing that may hereafter be
scheduled and to submit its position paper as may be required.

The Unions Manifestation/Motion to Strike Out Portions of and

Attachments in Philcoms Position Paper is hereby denied for lack of
merit.

The Unions charges of unfair labor practice against the Company

are hereby dismissed.

Pending resolution of the issues of illegal strike and bargaining

deadlock which are yet to be heard, all the striking workers are
directed to return to work within twenty-four (24) hours from receipt
of this Order and Philcom and/or Philcom Corporation are hereby
directed to unconditionally accept back to work all striking Union
officers and members under the same terms and conditions prior to
the strike. The parties are directed to cease and desist from
committing any acts that may aggravate the situation.

Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this

Department is hereby designated as the Hearing Officer to hear
and receive evidence on all matters and issues arising from the
present labor dispute and, thereafter, to submit a
report/recommendation within twenty (20) days from the termination
of the proceedings.
 The parties are further directed to file their respective position
papers with Atty. Lita V. Aglibut within ten (10) days from receipt of
this Order.

SO ORDERED.[5]

Philcom Corporation (Philcom) filed a motion for reconsideration. Philcom prayed

for reconsideration of the Order impleading it as party-litigant in the present case
and directing it to accept back to work unconditionally all the officers and
members of the union who participated in the strike. [6] Philcom also filed a Motion
to Certify Labor Dispute to the National Labor Relations Commission for
Compulsory Arbitration.[7]

For its part, Philcom Employees Union (PEU) filed a Motion for Partial
Reconsideration. PEU asked the Secretary to partially reconsider the 2 October
1998 Order insofar as it dismissed the unfair labor practices charges against
Philcom and included the illegal strike issue in the labor dispute. [8]

The Secretary denied both motions for reconsideration of Philcom and PEU in its
assailed Order of 27 November 1998. The pertinent parts of the Order read:

The question of whether or not Philcom Corporation should be

impleaded has been properly disposed of in the assailed Order. We
reiterate that neither the Company herein nor its predecessor was
able to convincingly establish that each is a separate entity in the
absence of any proof that there was indeed an actual closure and
cessation of the operations of the predecessor-company. We would
have accommodated the Company for a hearing on the matter had
it been willing and prepared to submit evidence to controvert the
finding that there was a mere merger. As it now stands, nothing on
record would prove that the two (2) companies are separate and
distinct from each other.

Having established that what took place was a mere merger, we

correspondingly conclude that the employer-employee relations
between the Company and the Union officers and members was
never severed. And in merger, the employees of the merged
companies or entities are deemed absorbed by the new company
(Filipinas Port Services, Inc. v. NLRC, et. al., G.R. No. 97237,
August 16, 1991). Considering that the Company failed miserably
to adduce any evidence to provide a basis for a contrary ruling,
allegations to the effect that employer-employee relations and
positions previously occupied by the workers no longer exist remain
just that mere allegations. Consequently, the Company cannot now
exempt itself from compliance with the Order. Neither can it
 successfully argue that the employees were validly dismissed. As
held in Telefunken Semiconductor Employees Union-FFW v.
Secretary of Labor and Employment (G.R. Nos. 122743 and
122715, December 12, 1997), to exclude the workers without first
ascertaining the extent of their individual participation in the strike
or non-compliance with the return-to-work orders will be tantamount
to dismissal without due process of law.

With respect to the unfair labor practice charges against the

Company, we have carefully reviewed the records and found no
reason to depart from the findings previously rendered. The issues
now being raised by the Union are the same issues discussed and
passed upon in our earlier Order.

Finally, it is our determination that the issue of the legality of the

strike is well within the jurisdiction of this Office. The same has
been properly submitted and assumed jurisdiction by the Office for
resolution.[9]

The dispositive portion of the Order reads:

WHEREFORE, there being no merit in the remaining Motions for

Reconsideration filed by both parties, the same are hereby
DENIED. Our 2 October 1998 Order STANDS. To expedite the
resolution of the Motion to Certify Labor Dispute to the NLRC for
Compulsory Arbitration, Philcom Employees Union is hereby
directed to submit its Opposition thereto within ten (10) days from
receipt of the copy of this Order.

SO ORDERED.[10]

PEU filed with this Court a petition for certiorari and prohibition under Rule 65 of
the Rules of Court assailing the Secretarys Orders of 2 October 1998 and 27
November 1998. This Court, in accordance with its Decision of 10 March 1999 in
G.R. No. 123426 entitled National Federation of Labor (NFL) vs. Hon.
Bienvenido E. Laguesma, Undersecretary of the Department of Labor and
Employment, and Alliance of Nationalist Genuine Labor Organization, Kilusang
Mayo Uno (ANGLO-KMU),[11] referred the case to the Court of Appeals.[12]

The Ruling of the Court of Appeals

On 31 July 2000, the Court of Appeals rendered judgment as follows:

WHEREFORE, PREMISES CONSIDERED, this petition is hereby

DENIED. The assailed portions of the Orders of the Secretary of
 Labor and Employment dated October 2, 1998 and November 27,
1998 are AFFIRMED.

SO ORDERED.[13]

The Court of Appeals ruled that, contrary to PEUs view, the Secretary could take
cognizance of an issue, even only incidental to the labor dispute, provided the
issue must be involved in the labor dispute itself or otherwise submitted to him for
resolution.

The Court of Appeals pointed out that the Secretary assumed jurisdiction over
the labor dispute upon Philcoms petition as a consequence of the strike that PEU
had declared and not because of the notices of strike that PEU filed with the
National Conciliation and Mediation Board (NCMB).

The Court of Appeals stated that the reason of the Secretarys assumption of
jurisdiction over the labor dispute was the staging of the strike. Consequently,
any issue regarding the strike is not merely incidental to the labor dispute
between PEU and Philcom, but also part of the labor dispute itself. Thus, the
Court of Appeals held that it was proper for the Secretary to take cognizance of
the issue on the legality of the strike.

The Court of Appeals also ruled that for an employee to claim an unfair labor
practice by the employer, the employee must show that the act charged as unfair
labor practice falls under Article 248 of the Labor Code. The Court of Appeals
held that the acts enumerated in Article 248 relate to the workers right to self-
organization. The Court of Appeals stated that if the act complained of has
nothing to do with the acts enumerated in Article 248, there is no unfair labor
practice.

The Court of Appeals held that Philcoms acts, which PEU complained of as
unfair labor practices, were not in any way related to the workers right to self-
organization under Article 248 of the Labor Code. The Court of Appeals held that
PEUs complaint constitutes an enumeration of mere grievances which should
have been threshed out through the grievance machinery or voluntary arbitration
outlined in the Collective Bargaining Agreement (CBA).

The Court of Appeals also held that even if by Philcoms acts, Philcom had
violated the provisions of the CBA, still those acts do not constitute unfair labor
practices under Article 248 of the Labor Code. The Court of Appeals held that
PEU failed to show that those violations were gross or that there was flagrant or
malicious refusal on the part of Philcom to comply with the economic provisions
of the CBA.
The Court of Appeals stated that as of 21 March 1989, as held in PAL vs. NLRC,
[14]
violations of CBAs will no longer be deemed unfair labor practices, except
those gross in character. Violations of CBAs, except those gross in character, are
mere grievances resolvable through the appropriate grievance machinery or
voluntary arbitration as provided in the CBAs.
Hence, this petition.

The Issues

In assailing the Decision of the Court of Appeals, petitioner contends that:

1. The Honorable Court of Appeals has failed to faithfully adhere

with the decisions of the Supreme Court when it affirmed the
order/resolution of the Secretary of Labor denying the Unions
Manifestation/Motion to Strike Out Portions of & Attachments in
Philcoms Position Paper and including the issue of illegal strike
notwithstanding the absence of any petition to declare the strike
illegal.

2. The Honorable Court of Appeals has decided a question of

substance in a way not in accord with law and jurisprudence
when it affirmed the order/resolution of the Secretary of Labor
dismissing the Unions charges of unfair labor practices.

3. The Honorable Court of Appeals has departed from the edict

of applicable law and jurisprudence when it failed to issue such
order mandating/directing the issuance of a writ of
execution directing the Company to unconditionally accept back
to work the Union officers and members under the same terms
and conditions prior to the strike and as well as to pay their
salaries/backwages and the monetary equivalent of their other
benefits from October 6, 1998 to date.[15]

The Ruling of the Court

The petition must fail.

PEU contends that the Secretary should not have taken cognizance of the issue
on the alleged illegal strike because it was not properly submitted to the
Secretary for resolution. PEU asserts that after Philcom submitted its position
paper where it raised the issue of the legality of the strike, PEU immediately
opposed the same by filing its Manifestation/Motion to Strike Out Portions of and
Attachments in Philcoms Position Paper. PEU asserts that it stated in its
Manifestation/Motion that certain portions of Philcoms position paper and some
of its attachments were irrelevant, immaterial and impertinent to the issues
assumed for resolution. Thus, PEU asserts that the Court of Appeals should not
have affirmed the Secretarys order denying PEUs Manifestation/Motion.

PEU also contends that, contrary to the findings of the Court of Appeals, the
Secretarys assumption of jurisdiction over the labor dispute was based on the
two notices of strike that PEU filed with the NCMB. PEU asserts that only the
issues on unfair labor practice and bargaining deadlock should be resolved in the
present case.

PEU insists that to include the issue on the legality of the strike despite its
opposition would convert the case into a petition to declare the strike illegal.

PEUs contentions are untenable.

The Secretary properly took cognizance of the issue on the legality of the
strike. As the Court of Appeals correctly pointed out, since the very reason of the
Secretarys assumption of jurisdiction was PEUs declaration of the strike, any
issue regarding the strike is not merely incidental to, but is essentially involved in,
the labor dispute itself.

Article 263(g) of the Labor Code provides:

When, in his opinion, there exists a labor dispute causing or likely

to cause a strike or lockout in an industry indispensable to the
national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such
assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in
the assumption or certification order. If one has already taken place
at the time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the
same terms and conditions prevailing before the strike or
lockout. The Secretary of Labor and Employment or the
Commission may seek the assistance of law enforcement agencies
to ensure the compliance with this provision as well as with such
orders as he may issue to enforce the same.

x x x x.

The powers granted to the Secretary under Article 263(g) of the Labor Code have
been characterized as an exercise of the police power of the State, with the aim
of promoting public good. [16] When the Secretary exercises these powers, he is
granted great breadth of discretion in order to find a solution to a labor
dispute. The most obvious of these powers is the automatic enjoining of an
impending strike or lockout or its lifting if one has already taken place. [17]

In this case, the Secretary assumed jurisdiction over the dispute because it falls
in an industry indispensable to the national interest. As noted by the Secretary

[T]he Company has been a vital part of the telecommunications

industry for 73 years. It is particularly noted for its expertise and
dominance in the area of international telecommunications. Thus, it
performs a vital role in providing critical services indispensable to
the national interest. It is for this very reason that this Office
strongly opines that any concerted action, particularly a prolonged
work stoppage is fraught with dire consequences. Surely, the on-
going strike will adversely affect not only the livelihood of workers
and their dependents, but also the companys suppliers and
dealers, both in the public and private sectors who depend on the
companys facilities in the day-to-day operations of their businesses
and commercial transactions. The operational viability of the
company is likewise adversely affected, especially its expansion
program for which it has incurred debts in the approximate amount
of P2 Billion. Any prolonged work stoppage will also bring about
substantial losses in terms of lost tax revenue for the government
and would surely pose a serious set back in the companys
modernization program.

At this critical time when government is working to sustain the

economic gains already achieved, it is the paramount concern of
this Office to avert any unnecessary work stoppage and, if one has
already occurred, to minimize its deleterious effect on the workers,
the company, the industry and national economy as a whole. [18]
It is of no moment that PEU never acquiesced to the submission for
resolution of the issue on the legality of the strike. PEU cannot prevent resolution
of the legality of the strike by merely refusing to submit the issue for resolution. It
is also immaterial that this issue, as PEU asserts, was not properly submitted for
resolution of the Secretary.
The authority of the Secretary to assume jurisdiction over a labor dispute causing
or likely to cause a strike or lockout in an industry indispensable to national
interest includes and extends to all questions and controversies arising
from such labor dispute. The power is plenary and discretionary in nature
to enable him to effectively and efficiently dispose of the dispute.[19]

Besides, it was upon Philcoms petition that the Secretary immediately assumed
jurisdiction over the labor dispute on 19 November 1997.[20] If petitioners notices
of strike filed on 21 October and 4 November 1997 were what prompted the
assumption of jurisdiction, the Secretary would have issued the assumption order
as early as those dates.
Moreover, after an examination of the position paper [21] Philcom submitted to the
Secretary, we see no reason to strike out those portions which PEU seek to
expunge from the records. A careful study of all the facts alleged, issues raised,
and arguments presented in the position paper leads us to hold that the portions
PEU seek to expunge are necessary in the resolution of the present case.

On the documents attached to Philcoms position paper, except for Annexes MM-
2 to MM-22 inclusive[22] which deal with the supposed consolidation of Philippine
Global Communications, Inc. and Philcom Corporation, we find the other
annexes relevant and material in the resolution of the issues that have emerged
in this case.

PEU also claims that Philcom has committed several unfair labor practices. PEU
asserts that there are factual and evidentiary bases for the charge of unfair labor
practices against Philcom.

On unfair labor practices of employers, Article 248 of the Labor Code provides:

Unfair labor practices of employers. It shall be unlawful for an

employer to commit any of the following unfair labor practice:

(a) To interfere with, restrain or coerce employees in the exercise of

their right to self-organization;

(b) To require as a condition of employment that a person or

an employee shall not join a labor organization or shall withdraw
from one to which he belongs;

(c) To contract out services or functions being performed by

union members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the

formation or administration of any labor organization, including the
giving of financial or other support to it or its organizers or
supporters;

(e) To discriminate in regard to wages, hours of work, and other

terms and conditions of employment in order to encourage or
discourage membership in any labor organization. x x x
(f) To dismiss, discharge, or otherwise prejudice or discriminate
against an employee for having given or being about to give
testimony under this Code;
 (g) To violate the duty to bargain collectively as prescribed by this
Code;
(h) To pay negotiation or attorneys fees to the union or its officers or
agents as part of the settlement of any issue in collective
bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

Unfair labor practice refers to acts that violate the workers right to organize. The
prohibited acts are related to the workers right to self-organization and to the
observance of a CBA. Without that element, the acts, no matter how unfair, are
not unfair labor practices.[23] The only exception is Article 248(f), which in any
case is not one of the acts specified in PEUs charge of unfair labor practice.

A review of the acts complained of as unfair labor practices of Philcom convinces

us that they do not fall under any of the prohibited acts defined and enumerated
in Article 248 of the Labor Code. The issues of misimplementation or non-
implementation of employee benefits, non-payment of overtime and other
monetary claims, inadequate transportation allowance, water, and other facilities,
are all a matter of implementation or interpretation of the economic provisions of
the CBA between Philcom and PEU subject to the grievance procedure.

We find it pertinent to quote certain portions of the assailed Decision, thus

A reading of private respondents justification for the acts

complained of would reveal that they were actually legitimate
reasons and not in anyway related to union busting. Hence, as to
compelling employees to render flexible labor and additional work
without additional compensation, it is the companys explanation
that the employees themselves voluntarily took on work pertaining
to other assignments but closely related to their job description
when there was slack in the business which caused them to be
idle. This was the case of the International Telephone Operators
who tried telemarketing when they found themselves with so much
free time due to the slowdown in the demand for international line
services. With respect to the Senior Combination Technician at
the Cebu branch who was allegedly made to do all around work,
the same happened only once when the lineman was absent and
the linemans duty was his ultimate concern. Moreover, the new
assignment of the technicians at CTSS who were promoted to QCE
were based on the job description of QCE, while those of the other
technicians were merely temporary due to the promotion of several
technicians to QCE (pars. 9-12, Philcoms Reply to PEUs Position
Paper; Annex E, Petition; pp. 350-351, ibid.).
On the alleged misimplementation and/or non-implementation of
employees benefits, such as shoe allowance, rainboots, raincoats,
OIC shift allowance, P450.00 monthly allowance, driving allowance,
motorcycle award and full-time physician, the company gave the
following explanation which this Court finds plausible, to wit:

16. The employees at CTSS were given One

Thousand Pesos (P1,000.00) cash or its equivalent in
purchase orders because it was their own demand
that they be given the option to buy the pair of leather
boots they want. For the Cebu branch, the employees
themselves failed to include these benefits in the list
of their demands during the preparation of the budget
for the year 1997 despite the instruction given to them
by the branch manager. According to the employees,
they were not aware that they were entitled to these
benefits. They thought that because they have been
provided with two vans to get to their respective
assignments, these benefits are available only to
collectors, messengers and technicians in
motorcycles.

17. The P450.00 monthly allowance was

provided by the CBA to be given to counter
clerks. However, the position of counter clerks had
been abolished in accordance with the reorganization
plan undertaken by the company in April 1995, with
the full knowledge of the Union membership. As a
result of the abolition of the position of counter clerks,
there was no more reason for granting the subject
allowance.

18. The company more than satisfied the

provision in the CBA to engage the services of a
physician and provided adequate medical
services. Aside from a part time physician who
reports for duty everyday, the company has secured
the services of Prolab Diagnostics, which has
complete medical facilities and personnel, to serve
the medical needs of the employees. x x x

19. The Union demands that a full-time

physician to be assigned at the Head Office. This
practice, is not provided in the CBA and, moreover is
too costly to maintain. The medical services offered
by Prolab [D]iagnostics are even better and more
 comprehensive than any full time physician can
give. It places at the employees disposal numerous
specialists in various fields of medicine. It is beyond
understanding why the Union would insist on having
a full-time physician when they could avail of better
services from Prolab Diagnostics.

(Philcoms Reply to PEUs Position Paper,

pp.352, 354, ibid.)

On the issue of non-payment, discrimination and/or deprivation of

overtime, restday work, waiting/stand by time and staff meeting
allowance, suffice it to state that there is nothing on record to prove
the same. Petitioner did not present evidence substantial enough to
support its claim.

As to the alleged inadequate transportation allowance and facilities,

the company posits that:

30. The transportation allowances given to the

Dasmarinas and Pinugay employees are more than
adequate to defray their daily transportation
cost. Hence, there is absolutely no justification for an
increase in the said allowance. In fact, said
employees at Dasmarinas and Pinugay, who are only
residing in areas near their place of work, are more
privileged as they receive transportation expenses
while the rest of the company workers do not.

31. As to the demand for clean drinking water,

the company has installed sufficient and potable
water inside the Head Office even before the strike
was staged by the Union. Any person who visits the
Makati Head Office can attest to this fact.

(Philcoms Reply to PEUs Position Paper, p.

357, ibid.)

Anent the allegation of PABX transfer and contractualization of

PABX service and position, these were done in anticipation of the
company to switch to an automatic PABX machine which requires
no operator. This cannot be treated as ULP since management is at
liberty, absent any malice on its part, to abolish positions which it
deems no longer necessary (Arrieta vs. National Labor Relations
Commission, 279 SCRA 326, 332). Besides, at the time the
company hired a temporary employee to man the machine during
daytime, the subject position was vacant while the assumption of
the function by the company guard during nighttime was only for a
brief period.

With respect to the perceived massive contractualization of the

company, said charge cannot be considered as ULP since the
hiring of contractual workers did not threaten the security of tenure
of regular employees or union members. That only 160 employees
out of 400 employees in the companys payroll were considered
rank and file does not of itself indicate unfair labor practice since
this is but a company prerogative in connection with its business
concerns.

Likewise, the offer or promotions to a few union members is neither

unlawful nor an economic inducement. These offers were made in
accordance with the legitimate need of the company for the
services of these employees to fill positions left vacant by either
retirement or resignation of other employees. Besides, a promotion
is part of the career growth of employees found competent in their
work. Thus, in Bulletin Publishing Corporation vs. Sanchez (144
SCRA 628, 641), the Supreme Court held that (T)he promotion of
employees to managerial or executive positions rests upon the
discretion of management. Managerial positions are offices which
can only be held by persons who have the trust of the corporation
and its officers. It is the prerogative of management to promote any
individual working within the company to a higher position. It should
not be inhibited or prevented from doing so. A promotion which is
manifestly beneficial to an employee should not give rise to a
gratuitous speculation that such a promotion was made simply to
deprive the union of the membership of the promoted employee,
who after all appears to have accepted his promotion.

That the promotions were made near or around the time when CBA
negotiations were about to be held does not make the companys
action an unfair labor practice. As explained by the company, these
promotions were based on the availability of the position and the
qualification of the employees promoted (p. 6, Annex 4, Philcoms
Reply to PEUs Position Paper; p. 380, ibid.)

On the unions charge that management disallowed leave of union

officers and members to attend union seminar, this is belied by the
evidence submitted by the union itself. In a letter to PEUs
President, the company granted the leave of several union officers
and members to attend a seminar notwithstanding that its request
to be given more details about the affair was left unheeded by the
union (Annex Y, PEUs Position Paper; p. 222, ibid.). Those who
were denied leave were urgently needed for the operation of the
company.

On the ULP issue of disinformation scheme, surveillance and

interference with union affairs, these are mere allegations
unsupported by facts. The charge of black propaganda allegedly
committed by the company when it supposedly posted two (2)
letters addressed to the Union President is totally
baseless. Petitioner presents no proof that it was the company
which was behind the incident. On the purported disallowance of
union members to observe the July 27, 1997 CBA meeting, the
company explained that it only allowed one (1) employee from
ITTO, instead of two (2), as it would adversely affect the operation
of the group. It also took into consideration the fact that ITTO
members represent only 20% of the union. Other union members
from other departments of the company should have equal
representation (Annex "L, Position Paper for the Union; pp. 205-
206, ibid.). As to the alleged surveillance of the company guards
during a union seminar, We find the idea of sending guards to spy
on a mere union seminar quite preposterous. It is thus not likely for
the company which can gain nothing from it to waste its resources
in such a scheme.

On the issuance of memorandum/notice to employees without

giving copy to union, change in work schedule at Traffic Records
Section and ITTO policies, the company has sufficiently rebutted
the same, thus:

27. The Union also whines about the failure of

the company to furnish copies of memoranda or
notices sent to employees and change of work
schedules at the Traffic Records Section and ITTO
policies. The CBA, however, does not obligate the
Company to give the Union a copy of each and every
memorandum or notice sent to employees. This
would be unreasonable and impractical. Neither did
the Union demand that they be furnished copies of
the same. This is clearly a non-issue as copies of all
memoranda or notices issued by management are
readily available upon request by any employee or the
Union.

28. Contrary to the allegations of the Union, the

rationale and mechanics for the abolishment of the
midnight schedule at the Traffic Record Services had
been thoroughly and adequately discussed with the
 Unions President, Robert Benosa, and the staff of
Traffic Record Services in the meeting held on May 9,
1997. The midnight services were abolished for purely
economic reasons. The company realized that the
midnight work can be handled in the morning without
hampering normal operations. At the same time, the
company will be able to save on cost. For this
objective, the employees concerned agreed to create
a manning and shifting schedule starting at 6:00 a.m.
up to 10:00 p.m., with each employee rendering only
eight hours of work every day without violating any
provision of the labor laws or the CBA.[24]

The Court has always respected a companys exercise of its prerogative to

devise means to improve its operations. Thus, we have held that management is
free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, supervision and transfer of
employees, working methods, time, place and manner of work. [25]

This is so because the law on unfair labor practices is not intended to

deprive employers of their fundamental right to prescribe and enforce such rules
as they honestly believe to be necessary to the proper, productive and profitable
operation of their business.[26]

Even assuming arguendo that Philcom had violated some provisions in the CBA,
there was no showing that the same was a flagrant or malicious refusal to comply
with its economic provisions. The law mandates that such violations should not
be treated as unfair labor practices. [27]

PEU also asserts that the Court of Appeals should have issued an order directing
the issuance of a writ of execution ordering Philcom to accept back to work
unconditionally the striking union officers and members under the same terms
and conditions prevailing before the strike. PEU asserts that the union officers
and members should be paid their salaries or backwages and monetary
equivalent of other benefits beginning 6 October 1998 when PEU received a
copy of the Secretarys 2 October 1998 return-to-work order.

PEU claims that even if the issue of illegal strike can be included in the assailed
orders and that the union officers and members have been terminated as a result
of the alleged illegal strike, still, the Secretary has to rule on the illegality of the
strike and the liability of each striker. PEU asserts that the union officers and
members should first be accepted back to work because a return-to-work order is
immediately executory.[28]
We rule on the legality of the strike if only to put an end to this protracted labor
dispute. The facts necessary to resolve the legality of the strike are not in
dispute.

The strike and the strike activities that PEU had undertaken were patently illegal
for the following reasons:

1. Philcom is engaged in a vital industry protected by Presidential Decree

No. 823 (PD 823), as amended by Presidential Decree No. 849, from strikes and
lockouts. PD 823, as amended, provides:

Sec. 1. It is the policy of the State to encourage free trade

unionism and free collective bargaining within the framework of
compulsory and voluntary arbitration. Therefore, all forms of
strikes, picketings and lockouts are hereby strictly prohibited in
vital industries, such as in public utilities, including
transportation and communications, x x x. (Emphasis
supplied)

Enumerating the industries considered as vital, Letter of Instruction No. 368

provides:

For the guidance of workers and employers, some of whom have

been led into filing notices of strikes and lockouts even in vital
industries, you are hereby instructed to consider the following as
vital industries and companies or firms under PD 823 as amended:

1. Public Utilities:

xxxx

B. Communications:
1) Wire or wireless telecommunications
such as telephone, telegraph, telex, and cable
companies or firms; (Emphasis supplied)

xxxx

It is therefore clear that the striking employees violated the no-strike policy
of the State in regard to vital industries.

2. The Secretary had already assumed jurisdiction over the dispute. Despite the
issuance of the return-to-work orders dated 19 November and 28 November
1997, the striking employees failed to return to work and continued with
their strike.
 Regardless of their motives, or the validity of their claims, the striking
employees should have ceased or desisted from all acts that would undermine
the authority given the Secretary under Article 263(g) of the Labor Code. They
could not defy the return-to-work orders by citing Philcoms alleged unfair labor
practices to justify such defiance.[29]

PEU could not have validly anchored its defiance to the return-to-work
orders on the motion for reconsideration that it had filed on the assumption of
jurisdiction order. A return-to-work order is immediately effective and
executory despite the filing of a motion for reconsideration. It must be
strictly complied with even during the pendency of any petition questioning
its validity.[30]

The records show that on 22 November 1997, Philcom published in

the Philippine Daily Inquirer a notice to striking employees to return to work.
[31]
These employees did not report back to work but continued their mass action.
In fact, they lifted their picket lines only on 22 December 1997. [32] Philcom
formally notified twice these employees to explain in writing why they should not
be dismissed for defying the return-to-work order.[33] Philcom held administrative
hearings on these disciplinary cases. [34] Thereafter, Philcom dismissed these
employees for abandonment of work in defiance of the return-to-work order.[35]

A return-to-work order imposes a duty that must be discharged more than

it confers a right that may be waived. While the workers may choose not to obey,
they do so at the risk of severing their relationship with their employer.[36]

The following provision of the Labor Code governs the effects of defying a
return-to-work order:

ART. 264. Prohibited activities. (a) x x x x

No strike or lockout shall be declared after assumption

of jurisdiction by the President or the Minister or after
certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same
grounds for the strike or lockout x x x x

Any union officer who knowingly participates in illegal strike

and any worker or union officer who knowingly participates in
the commission of illegal acts during a strike may be declared
to have lost his employment status: Provided, That mere
participation of a worker in a lawful strike, shall not constitute
sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful
strike. (Emphasis supplied)
A strike undertaken despite the Secretarys issuance of an assumption or
certification order becomes a prohibited activity, and thus, illegal, under Article
264(a) of the Labor Code. The union officers who knowingly participate in the
illegal strike are deemed to have lost their employment status. The union
members, including union officers, who commit specific illegal acts or who
knowingly defy a return-to-work order are also deemed to have lost their
employment status.[37] Otherwise, the workers will simply refuse to return to their
work and cause a standstill in the company operations while retaining the
positions they refuse to discharge and preventing management to fill up their
positions.[38]

Hence, the failure of PEUs officers and members to comply immediately with the
return-to-work orders dated 19 November and 28 November 1997 cannot be
condoned. Defiance of the return-to-work orders of the Secretary
constitutes a valid ground for dismissal.[39]

3. PEU staged the strike using unlawful means and methods.

Even if the strike in the present case was not illegal per se, the strike activities
that PEU had undertaken, especially the establishment of human barricades at
all entrances to and egresses from the company premises and the use of
coercive methods to prevent company officials and other personnel from leaving
the company premises, were definitely illegal. [40] PEU is deemed to have admitted
that its officers and members had committed these illegal acts, as it never
disputed Philcoms assertions of PEUs unlawful strike activities in all the
pleadings that PEU submitted to the Secretary and to this Court.

PEUs picketing officers and members prohibited other tenants at the Philcom
building from entering and leaving the premises. Leonida S. Rabe, Country
Manager of Societe Internationale De Telecommunications Aeronautiques (SITA),
a tenant at the Philcom building, wrote two letters addressed to PEU President
Roberto B. Benosa. She told Benosa that PEUs act of obstructing the free
ingress to and egress from the company premises has badly disrupted normal
operations of their organization.[41]

The right to strike, while constitutionally recognized, is not without legal

constrictions. Article 264(e) of the Labor Code, on prohibited activities, provides:

No person engaged in picketing shall commit any act of violence,

coercion or intimidation or obstruct the free ingress to or egress
from the employers premises for lawful purposes, or obstruct public
thoroughfares.
The Labor Code is emphatic against the use of violence, coercion, and
intimidation during a strike and to this end prohibits the obstruction of free
passage to and from the employers premises for lawful purposes. A picketing
labor union has no right to prevent employees of another company from getting
in and out of its rented premises, otherwise, it will be held liable for damages for
its acts against an innocent by-stander.[42]

The sanction provided in Article 264(a) is so severe that any worker or union
officer who knowingly participates in the commission of illegal acts during a strike
may be declared to have lost his employment status. [43]

By insisting on staging the prohibited strike and defiantly picketing Philcoms

premises to prevent the resumption of company operations, the striking
employees have forfeited their right to be readmitted. [44]

4. PEU declared the strike during the pendency of preventive mediation

proceedings at the NCMB.
On 17 November 1997, while a conciliation meeting was being held at the
NCMB in NCMB-NCR-NS 10-435-97, PEU went on strike. It should be noted that
in their meeting on 11 November 1997, both Philcom and PEU were even
advised to maintain the status quo.[45] Such disregard of the mediation
proceedings was a blatant violation of Section 6, Book V, Rule XXII of the
Omnibus Rules Implementing the Labor Code, which explicitly obliges the parties
to bargain collectively in good faith and prohibits them from impeding or
disrupting the proceedings.[46] The relevant provision of the Implementing Rules
provides:

Section 6. Conciliation. x x x x

During the proceedings, the parties shall not do any act which may
disrupt or impede the early settlement of dispute. They are obliged,
as part of their duty, to bargain collectively in good faith, to
participate fully and promptly in the conciliation meetings called by
the regional branch of the Board. x x x x
Article 264(a) of the Labor Code also considers it a prohibited activity to declare
a strike during the pendency of cases involving the same grounds for the same
strike.

Lamentably, PEU defiantly proceeded with their strike during the pendency of the
conciliation proceedings.

5. PEU staged the strike in utter disregard of the grievance procedure

established in the CBA.

By PEUs own admission, the Unions complaints to the management

began in June 1997 even before the start of the 1997 CBA renegotiations.
[47]
Their CBA expired on 30 June 1997.[48] PEU could have just taken up their
grievances in their negotiations for the new CBA. This is what a Philcom officer
had suggested to the Dasmarias staff when the latter requested on 16 June
1997 for an increase in transportation allowance. [49] In fact, when PEU declared
the strike, Philcom and PEU had already agreed on 37 items in their negotiations
for the new CBA.[50]

The bottom line is that PEU should have immediately resorted to the
grievance machinery provided for in the CBA. [51] In disregarding this procedure,
the union leaders who knowingly participated in the strike have acted
unreasonably. The law cannot interpose its hand to protect them from the
consequences of their illegal acts.[52]

A strike declared on the basis of grievances which have not been

submitted to the grievance committee as stipulated in the CBA of the parties is
premature and illegal.[53]
Having held the strike illegal and having found that PEUs officers and
members have committed illegal acts during the strike, we hold that no writ of
execution should issue for the return to work of PEU officers who participated in
the illegal strike, and PEU members who committed illegal acts or who defied the
return-to-work orders that the Secretary issued on 19 November 1997 and 28
November 1997. The issue of who participated in the illegal strike, committed
illegal acts, or defied the return-to-work orders is a question of fact that must be
resolved in the appropriate proceedings before the Secretary of Labor.

WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court
of Appeals in CA-G.R. SP No. 53989, with the MODIFICATION that the Secretary
of Labor is directed to determine who among the Philcom Employees Union
officers participated in the illegal strike, and who among the union members
committed illegal acts or defied the return-to-work orders of 19 November 1997
and 28 November 1997. No pronouncement as to costs.

SO ORDERED.
G.R. No. 162943 December 6, 2010

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his

capacity as President, Petitioners, vs. BAYER PHILIPPINES, INC., DIETER J.
LONISHEN (President), ASUNCION AMISTOSO (HRD Manager), AVELINA
REMIGIO AND ANASTACIA VILLAREAL,
Respondents.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

This petition for review on certiorari assails the Decision[1] dated December 15,
2003 and Resolution[2] dated March 23, 2004 of the Court of Appeals (CA) in CA-
G.R. SP No. 73813.

Petitioner Employees Union of Bayer Philippines [3] (EUBP) is the exclusive

bargaining agent of all rank-and-file employees of Bayer Philippines (Bayer), and
is an affiliate of the Federation of Free Workers (FFW). In 1997, EUBP, headed
by its president Juanito S. Facundo (Facundo), negotiated with Bayer for the
signing of a collective bargaining agreement (CBA). During the negotiations,
EUBP rejected Bayers 9.9% wage-increase proposal resulting in a bargaining
deadlock. Subsequently, EUBP staged a strike, prompting the Secretary of the
Department of Labor and Employment (DOLE) to assume jurisdiction over the
dispute.

In November 1997, pending the resolution of the dispute, respondent Avelina

Remigio (Remigio) and 27 other union members, without any authority from their
union leaders, accepted Bayers wage-increase proposal. EUBPs grievance
committee questioned Remigios action and reprimanded Remigio and her
allies. On January 7, 1998, the DOLE Secretary issued an arbitral award ordering
EUBP and Bayer to execute a CBA retroactive to January 1, 1997 and to be
made effective until December 31, 2001. The said CBA[4] was registered on July
8, 1998 with the Industrial Relations Division of the DOLE-National Capital
Region (NCR).[5]

Meanwhile, the rift between Facundos leadership and Remigios group

broadened. On August 3, 1998, barely six months from the signing of the new
CBA, during a company-sponsored seminar,[6] Remigio solicited signatures from
union members in support of a resolution containing the decision of the
signatories to: (1) disaffiliate from FFW, (2) rename the union as Reformed
Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution
and by-laws for the union, (4) abolish all existing officer positions in the union and
elect a new set of interim officers, and (5) authorize REUBP to administer the
CBA between EUBP and Bayer.[7] The said resolution was signed by 147 of the
257 local union members. A subsequent resolution was also issued affirming the
first resolution.[8]

A tug-of-war then ensued between the two rival groups, with both seeking
recognition from Bayer and demanding remittance of the union dues collected
from its rank-and-file members. On September 8, 1998, Remigios splinter group
wrote Facundo, FFW and Bayer informing them of the decision of the majority of
the union members to disaffiliate from FFW.[9] This was followed by another letter
informing Facundo, FFW and Bayer that an interim set of REUBP executive
officers and board of directors had been appointed, and demanding the
remittance of all union dues to REUBP. Remigio also asked Bayer to desist from
further transacting with EUBP. Facundo, meanwhile, sent similar requests to
Bayer[10] requesting for the remittance of union dues in favor of EUBP and
accusing the company of interfering with purely union matters. [11] Bayer
responded by deciding not to deal with either of the two groups, and by placing
the union dues collected in a trust account until the conflict between the two
groups is resolved.[12]

On September 15, 1998, EUBP filed a complaint for unfair labor practice (first
ULP complaint) against Bayer for non-remittance of union dues. The case was
docketed as NLRC-NCR-Case No. 00-09-07564-98. [13]

EUBP later sent a letter dated November 5, 1998 to Bayer asking for a grievance
conference.[14] The meeting was conducted by the management on November
11, 1998, with all REUBP officers including their lawyers present. Facundo did
not attend the meeting, but sent two EUBP officers to inform REUBP and the
management that a preventive mediation conference between the two groups
has been scheduled on November 12, 1998 before the National Conciliation and
Mediation Board (NCMB).[15]

Apparently, the two groups failed to settle their issues as Facundo again sent
respondent Dieter J. Lonishen two more letters, dated January 14,
1999[16] and September 2, 1999,[17] asking for a grievance meeting with the
management to discuss the failure of the latter to comply with the terms of their
CBA. Both requests remained unheeded.

On February 9, 1999, while the first ULP case was still pending and despite
EUBPs repeated request for a grievance conference, Bayer decided to turn over
the collected union dues amounting to P254,857.15 to respondent Anastacia
Villareal, Treasurer of REUBP.
Aggrieved by the said development, EUBP lodged a complaint [18] on March 4,
1999 against Remigios group before the Industrial Relations Division of the
DOLE praying for their expulsion from EUBP for commission of acts that threaten
the life of the union.

On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP
complaint for lack of jurisdiction.[19] The Arbiter explained that the root cause for
Bayers failure to remit the collected union dues can be traced to the intra-union
conflict between EUBP and Remigios group [20] and that the charges imputed
against Bayer should have been submitted instead to voluntary arbitration.
[21]
EUBP did not appeal the said decision.[22]

On December 14, 1999, petitioners filed a second ULP complaint against herein
respondents docketed as NLRC-RAB-IV Case No. 12-11813-99-L. Three days
later, petitioners amended the complaint charging the respondents with unfair
labor practice committed by organizing a company union, gross violation of the
CBA and violation of their duty to bargain. [23] Petitioners complained that Bayer
refused to remit the collected union dues to EUBP despite several demands sent
to the management.[24] They also alleged that notwithstanding the requests sent
to Bayer for a renegotiation of the last two years of the 1997-2001 CBA between
EUBP and Bayer, the latter opted to negotiate instead with Remigios group. [25]

On even date, REUBP and Bayer agreed to sign a new CBA. Remigio
immediately informed her allies of the managements decision. [26]

In response, petitioners immediately filed an urgent motion for the issuance of a

restraining order/injunction[27] before the National Labor Relations Commission
(NLRC) and the Labor Arbiter against respondents. Petitioners asserted their
authority as the exclusive bargaining representative of all rank-and-file
employees of Bayer and asked that a temporary restraining order be issued
against Remigios group and Bayer to prevent the employees from ratifying the
new CBA. Later, petitioners filed a second amended complaint [28] to include in its
complaint the issue of gross violation of the CBA for violation of the contract bar
rule following Bayers decision to negotiate and sign a new CBA with Remigios
group.

Meanwhile, on January 26, 2000, the Regional Director of the Industrial Relations
Division of DOLE issued a decision dismissing the issue on expulsion filed by
EUBP against Remigio and her allies for failure to exhaust reliefs within the union
and ordering the conduct of a referendum to determine which of the two groups
should be recognized as union officers. [29] EUBP seasonably appealed the said
decision to the Bureau of Labor Relations (BLR). [30] On June 16, 2000, the BLR
reversed the Regional Directors ruling and ordered the management of Bayer to
respect the authority of the duly-elected officers of EUBP in the administration of
the prevailing CBA.[31]
Unfortunately, the said BLR ruling came late since Bayer had already signed a
new CBA[32] with REUBP on February 21, 2000. The said CBA was eventually
ratified by majority of the bargaining unit. [33]

On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs

second ULP complaint for lack of jurisdiction. [34] The Labor Arbiter explained the
dismissal as follows:
All told, were it not for the fact that there were two (2) [groups] of
employees, the Union led by its President Juanito Facundo and the
members who decided to disaffiliate led by Ms. Avelina Remigio,
claiming to be the rightful representative of the rank and file
employees, the Company would not have acted the way it did and
the Union would not have filed the instant case.
Clearly then, as the case involves intra-union disputes, this Office is
bereft of any jurisdiction pursuant to Article 226 of the Labor Code,
as amended, which provides pertinently in part, thus:
Bureau of Labor Relations The Bureau of Labor
Relations and the Labor Relations Divisions in the
regional offices of the Department of Labor and
Employment shall have original and exclusive
authority to act, at their own initiative or upon request
of either or both parties, on all inter-union and intra-
union conflicts, and all disputes, grievances or
problems arising from or affecting labor-management
relations in all workplaces whether agricultural or non-
agricultural, except those arising from the
implementation or interpretation of collective
bargaining agreements which shall be the subject of
grievance procedure and/or voluntary arbitration.
Specifically, with respect to the union dues, the authority is the case
of Cebu Seamens Association[,] Inc. vs. Ferrer-Calleja, (212 SCRA
51), where the Supreme Court held that when the issue calls for the
determination of which between the two groups within a union is
entitled to the union dues, the same cannot be taken cognizance of
by the NLRC.
xxxx
WHEREFORE, premises considered, the instant complaint is
hereby DISMISSED on the ground of lack of jurisdiction.

SO ORDERED.[35]
On June 28, 2000, the NLRC resolved to dismiss[36] petitioners motion for a
restraining order and/or injunction stating that the subject matter involved an
intra-union dispute, over which the said Commission has no jurisdiction. [37]

Aggrieved by the Labor Arbiters decision to dismiss the second ULP complaint,
petitioners appealed the said decision, but the NLRC denied the appeal.
[38]
EUBPs motion for reconsideration was likewise denied. [39]

Thus, petitioners filed a Rule 65 petition to the CA. On December 15, 2003, the
CA sustained both the Labor Arbiter and the NLRCs rulings. The appellate court
explained,

A cursory reading of the three pleadings, to wit: the Complaint (Vol.

I, Rollo, p[p]. 166-167); the Amended Complaint (Vol. I, Rollo[,] pp.
168-172) and the Second Amended Complaint dated March 8,
2000 (Vol. II, Rollo, pp. 219-225) will readily show that the instant
case was brought about by the action of the Group of REM[I]GIO to
disaffiliate from FFW and to organized (sic) REUBP under the
tutelage of REM[I]GIO and VILLAREAL. At first glance of the case
at bar, it involves purely an (sic) inter-union and intra-union conflicts
or disputes between EUBP-FFW and REUBP which issue should
have been resolved by the Bureau of Labor Relations under Article
226 of the Labor Code. However, since no less than petitioners who
admitted that respondents committed gross violations of the CBA,
then the BLR is divested of jurisdiction over the case and the issue
should have been referred to the Grievance Machinery and
Voluntary Arbitrator and not to the Labor Arbiter as what petitioners
did in the case at bar. x x x

xxxx

Furthermore, the CBA entered between BAYER and EUBP-FFW

[has] a life span of only five years and after the said period, the
employees have all the right to change their bargaining unit who will
represent them. If there exist[s] two opposing unions in the same
company, the remedy is not to declare that such act is considered
unfair labor practice but rather they should conduct a certification
election provided [that] it should be conducted within 60 days of the
so[-]called freedom period before the expiration of the CBA.

WHEREFORE, premises considered, this Petition is DENIED and

the assailed Decision dated September 27, 2001 as well as the
Order dated June 21, 2002, denying the motion for reconsideration,
by the National Labor Relations Commission, First Division,
in NLRC Case No. RAB-IV-12-11813-99-L, are
hereby AFFIRMED in toto. Costs against petitioners.
 SO ORDERED.[40]

Undaunted, petitioners filed this Rule 45 petition before this Court. Initially, the
said petition was denied for having been filed out of time and for failure to comply
with the requirements provided in the 1997 Rules of Civil Procedure, as
amended.[41] Upon petitioners motion, however, we decided to reinstate their
appeal.

The following are the issues raised by petitioners, to wit:

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS,

IN ARRIVING AT THE DECISION PROMULGATED ON 15
DECEMBER 2003 AND RESOLUTION PROMULGATED ON
23 MARCH 2004, DECIDED THE CASE IN ACCORDANCE
WITH LAW AND JURISPRUDENCE; AND

II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS,

IN ARRIVING AT THE DECISION PROMULGATED ON 15
DECEMBER 2003 AND RESOLUTION PROMULGATED ON
23 MARCH 2004, GRAVELY ABUSE[D] ITS DISCRETION IN
ITS FINDINGS AND CONCLUSION THAT:

THE ACTS OF ABETTING OR ASSISTING IN THE

CREATION OF ANOTHER UNION, NEGOTIATING
OR BARGAINING WITH SUCH UNION, WHICH IS
NOT THE SOLE AND EXCLUSIVE BARGAINING
AGENT, VIOLATING THE DUTY TO BARGAIN
COLLECTIVELY, REFUSAL TO PROCESS
GRIEVABLE ISSUES IN THE GRIEVANCE
MACHINERY AND/OR REFUSAL TO DEAL WITH
THE SOLE AND EXCLUSIVE BARGAINING AGENT
ARE ACTS CONSTITUTING OR TANTAMOUNT TO
UNFAIR LABOR PRACTICE.[42]

Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the issues as

follows:

I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE

COURT OF APPEALS, THE NLRC AND THE LABOR
ARBITER ARE BINDING ON THIS HONORABLE COURT;

II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC

HAVE JURISDICTION OVER THE INSTANT CASE;

III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN

INTRA-UNION DISPUTE;
 IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN
AND AMISTOSO COMMITTED AN ACT OF UNFAIR LABOR
PRACTICE; AND

V. WHETHER OR NOT THE INSTANT CASE HAS BECOME

MOOT AND ACADEMIC.[43]

Essentially, the issue in this petition is whether the act of the management of
Bayer in dealing and negotiating with Remigios splinter group despite its validly
existing CBA with EUBP can be considered unfair labor practice and, if so,
whether EUBP is entitled to any relief.

Petitioners argue that the subject matter of their complaint, as well as the
subsequent amendments thereto, pertain to the unfair labor practice act of
respondents Bayer, Lonishen and Amistoso in dealing with Remigios splinter
union. They contend that (1) the acts of abetting or assisting in the creation of
another union is among those considered by the Labor Code, as amended,
specifically under Article 248 (d)[44] thereof, as unfair labor practice; (2) the act of
negotiating with such union constitutes a violation of Bayers duty to bargain
collectively; and (3) Bayers unjustified refusal to process EUBPs grievances and
to recognize the said union as the sole and exclusive bargaining agent are
tantamount to unfair labor practice.[45]

Respondents Bayer, Lonishen and Amistoso, on the other hand, contend that
there can be no unfair labor practice on their part since the requisites for unfair
labor practice i.e., that the violation of the CBA should be gross, and that it
should involve violation in the economic provisions of the CBA were not
satisfied. Moreover, they cite the ruling of the Labor Arbiter that the issues raised
in the complaint should have been ventilated and threshed out before the
voluntary arbitrators as provided in Article 261 of the Labor Code, as amended.
[46]
Respondents Remigio and Villareal, meanwhile, point out that the case should
be dismissed as against them since they are not real parties in interest in the
ULP complaint against Bayer,[47] and since there are no specific or material acts
imputed against them in the complaint.[48]

The petition is partly meritorious.

An intra-union dispute refers to any conflict between and among union members,
including grievances arising from any violation of the rights and conditions of
membership, violation of or disagreement over any provision of the unions
constitution and by-laws, or disputes arising from chartering or disaffiliation of the
union.[49] Sections 1 and 2, Rule XI of Department Order No. 40-03, Series of
2003 of the DOLE enumerate the following circumstances as inter/intra-union
disputes, viz:
 RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES

SECTION 1. Coverage. - Inter/intra-union disputes shall

include:
(a) cancellation of registration of a labor organization
filed by its members or by another labor organization;
(b) conduct of election of union and workers association
officers/nullification of election of union and workers
association officers;
(c) audit/accounts examination of union or workers
association funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for
union membership;
(g) validity/invalidity of impeachment/expulsion of union
and workers association officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA
registration;
(j) violations of or disagreements over any provision in
a union or workers association constitution and by-laws;
(k) disagreements over chartering or registration of
labor organizations and collective bargaining
agreements;
(l) violations of the rights and conditions of union or
workers association membership;
(m) violations of the rights of legitimate labor
organizations, except interpretation of collective
bargaining agreements;
(n) such other disputes or conflicts involving the rights
to self-organization, union membership and collective
bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or
workers association.
 SECTION 2. Coverage. Other related labor relations
disputes shall include any conflict between a labor union and the
employer or any individual, entity or group that is not a labor
organization or workers association. This includes: (1) cancellation
of registration of unions and workers associations; and (2) a petition
for interpleader.

It is clear from the foregoing that the issues raised by petitioners do not fall
under any of the aforementioned circumstances constituting an intra-union
dispute. More importantly, the petitioners do not seek a determination of whether
it is the Facundo group (EUBP) or the Remigio group (REUBP) which is the true
set of union officers. Instead, the issue raised pertained only to the validity of the
acts of management in light of the fact that it still has an existing CBA with
EUBP. Thus as to Bayer, Lonishen and Amistoso the question was whether they
were liable for unfair labor practice, which issue was within the jurisdiction of the
NLRC. The dismissal of the second ULP complaint was therefore erroneous.

However, as to respondents Remigio and Villareal, we find that petitioners

complaint was validly dismissed.

Petitioners ULP complaint cannot prosper as against respondents

Remigio and Villareal because the issue, as against them, essentially involves an
intra-union dispute based on Section 1 (n) of DOLE Department Order No. 40-03.
To rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC
will necessarily touch on the issues respecting the propriety of their disaffiliation
and the legality of the establishment of REUBP issues that are outside the scope
of their jurisdiction. Accordingly, the dismissal of the complaint was validly made,
but only with respect to these two respondents.

But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On
this score, we find that the evidence supports an answer in the affirmative.

It must be remembered that a CBA is entered into in order to foster

stability and mutual cooperation between labor and capital. An employer should
not be allowed to rescind unilaterally its CBA with the duly certified bargaining
agent it had previously contracted with, and decide to bargain anew with a
different group if there is no legitimate reason for doing so and without first
following the proper procedure. If such behavior would be tolerated, bargaining
and negotiations between the employer and the union will never be truthful and
meaningful, and no CBA forged after arduous negotiations will ever be honored
or be relied upon. Article 253 of the Labor Code, as amended, plainly provides:

ART. 253. Duty to bargain collectively when there exists a collective

bargaining agreement. Where there is a collective bargaining
agreement, the duty to bargain collectively shall also mean
 that neither party shall terminate or modify such agreement
during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior
to its expiration date. It shall be the duty of both parties to keep
the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties. (Emphasis
supplied.)

This is the reason why it is axiomatic in labor relations that a CBA entered into by
a legitimate labor organization that has been duly certified as the exclusive
bargaining representative and the employer becomes the law between them.
Additionally, in the Certificate of Registration [50] issued by the DOLE, it is
specified that the registered CBA serves as the covenant between the parties
and has the force and effect of law between them during the period of its
duration. Compliance with the terms and conditions of the CBA is mandated by
express policy of the law primarily to afford protection to labor [51] and to promote
industrial peace. Thus, when a valid and binding CBA had been entered into by
the workers and the employer, the latter is behooved to observe the terms and
conditions thereof bearing on union dues and representation. [52] If the employer
grossly violates its CBA with the duly recognized union, the former may be held
administratively and criminally liable for unfair labor practice. [53]

Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot
constitute unfair labor practice as the same did not involve gross violations in the
economic provisions of the CBA, citing the provisions of Articles 248 (1) and
261[54] of the Labor Code, as amended.[55] Their argument is, however,
misplaced.

Indeed, in Silva v. National Labor Relations Commission,[56] we explained

the correlations of Article 248 (1) and Article 261 of the Labor Code to mean that
for a ULP case to be cognizable by the Labor Arbiter, and for the NLRC to
exercise appellate jurisdiction thereon, the allegations in the complaint must
show prima facie the concurrence of two things, namely: (1) gross violation of the
CBA; and (2) the violation pertains to the economic provisions of the CBA. [57]

This pronouncement in Silva, however, should not be construed to apply

to violations of the CBA which can be considered as gross violations per se, such
as utter disregard of the very existence of the CBA itself, similar to what
happened in this case. When an employer proceeds to negotiate with a splinter
union despite the existence of its valid CBA with the duly certified and exclusive
bargaining agent, the former indubitably abandons its recognition of the latter and
terminates the entire CBA.
Respondents cannot claim good faith to justify their acts. They knew that
Facundos group represented the duly-elected officers of EUBP. Moreover, they
were cognizant of the fact that even the DOLE Secretary himself had recognized
the legitimacy of EUBPs mandate by rendering an arbitral award ordering the
signing of the 1997-2001 CBA between Bayer and EUBP. Respondents were
likewise well-aware of the pendency of the intra-union dispute case, yet they still
proceeded to turn over the collected union dues to REUBP and to effusively deal
with Remigio. The totality of respondents conduct, therefore, reeks with anti-
EUBP animus.

Bayer, Lonishen and Amistoso argue that the case is already moot and
academic following the lapse of the 1997-2001 CBA and their renegotiation with
EUBP for the 2006-2007 CBA. They also reason that the act of the company in
negotiating with EUBP for the 2006-2007 CBA is an obvious recognition on their
part that EUBP is now the certified collective bargaining agent of its rank-and-file
employees.[58]

We do not agree. First, a legitimate labor organization cannot be

construed to have abandoned its pending claim against the
management/employer by returning to the negotiating table to fulfill its duty to
represent the interest of its members, except when the pending claim has been
expressly waived or compromised in its subsequent negotiations with the
management. To hold otherwise would be tantamount to subjecting industrial
peace to the precondition that previous claims that labor may have against
capital must first be waived or abandoned before negotiations between them may
resume. Undoubtedly, this would be against public policy of affording protection
to labor and will encourage scheming employers to commit unlawful acts without
fear of being sanctioned in the future.

Second, that the management of Bayer decided to recognize EUBP as the

certified collective bargaining agent of its rank-and-file employees for purposes of
its 2006-2007 CBA negotiations is of no moment. It did not obliterate the fact that
the management of Bayer had withdrawn its recognition of EUBP and supported
REUBP during the tumultuous implementation of the 1997-2001 CBA. Such act
of interference which is violative of the existing CBA with EUBP led to the filing of
the subject complaint.

On the matter of damages prayed for by the petitioners, we have held that
as a general rule, a corporation cannot suffer nor be entitled to moral damages. A
corporation, and by analogy a labor organization, being an artificial person and
having existence only in legal contemplation, has no feelings, no emotions, no
senses; therefore, it cannot experience physical suffering and mental
anguish. Mental suffering can be experienced only by one having a nervous
system and it flows from real ills, sorrows, and griefs of life all of which cannot be
suffered by an artificial, juridical person. [59] A fortiori, the prayer for exemplary
damages must also be denied.[60] Nevertheless, we find it in order to award (1)
nominal damages in the amount of P250,000.00 on the basis of our ruling in De
La Salle University v. De La Salle University Employees Association (DLSUEA-
NAFTEU)[61] and Article 2221,[62] and (2) attorneys fees equivalent to 10% of the
monetary award. The remittance to petitioners of the collected union dues
previously turned over to Remigio and Villareal is likewise in order.

WHEREFORE, the petition for review on certiorari is PARTLY

GRANTED. The Decision dated December 15, 2003 and the Resolution
dated March 23, 2004 of the Court of Appeals in CA-G.R. SP No. 73813
are MODIFIED as follows:

1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion

Amistoso are found LIABLE for Unfair Labor Practice, and are
hereby ORDERED to remit to petitioners the amount of P254,857.15
representing the collected union dues previously turned over to
Avelina Remigio and Anastacia Villareal. They are
likewise ORDERED to pay petitioners nominal damages in the
amount of P250,000.00 and attorneys fees equivalent to 10% of the
monetary award; and

2) The complaint, as against respondents Remigio and Villareal.

is DISMISSED due to the lack of jurisdiction of the Labor Arbiter and
the NLRC, the complaint being in the nature of an intra-union dispute.

No pronouncement as to costs.

SO ORDERED.